North Dakota Protection & Advocacy Project

News: February 5, 2008

U.S. Treasury Announces Plan to Issue Some Social Security Benefits on Debit Cards

In January, the U.S. Treasury announced plans to give Social Security recipients who do not have bank accounts the option of getting their benefits on a prepaid debit card called a "Direct Express" card. Monthly SSDI and SSI benefits will be transferred automatically onto the Direct Express Card account and beneficiaries will be able to access their money at ATMs and financial institutions nationwide. They will also be able to pay bills and make purchases online, and make purchases and get cash back at retail locations with point-of-sale devices. The accounts are PIN-protected, FDIC-insured, and subject to federal consumer protection regulations. Issuing benefits electronically instead of mailing paper checks will reduce expenses for the Treasury.

According to the Treasury, in Spring 2008, some recipients in Texas, Oklahoma, Louisiana, and Arkansas will receive inserts with their benefit checks introducing the Direct Express card. The program will begin with these states because a high number of their residents are unbanked check recipients. Before Fall, the Treasury expects Direct Express to be offered nationwide through enrollment phases across the country.

The Direct Express cards have a number of potential advantages for beneficiaries who have either been unable or unwilling to open bank accounts and have their benefits direct deposited.

However, significant education may be needed for beneficiaries who may not be fully familiar with the advantages and risks involved in the use of debit cards, PINs, ATMs, and point-of-sale devices that are different from the risks involved in lost or stolen paper checks.